04.15.2026

Pollution Exclusion – Eighth Circuit (North Dakota Law)

North Star Mut. Ins. Co. v. Rodin
No. 24-1180, --- F.4th ---, 2026 WL 934925 (8th Cir. April 7, 2026)

The U.S. Court of Appeals for the Eighth Circuit affirmed the U.S. District Court for the District of North Dakota’s grant of summary judgment in favor of North Star Mutual Insurance Company (North Star), holding that the pollution exclusion in its liability policy barred coverage for bodily injuries allegedly caused by carbon monoxide emissions from a portable heater at the insureds’ farm shop. The appellate court also denied the insureds’ motion to certify a question to the North Dakota Supreme Court.

By way of background, Lyle Rodin and Darin Rodin (collectively, the Rodins) operated a farm in Southeastern North Dakota. Larry Alber (Alber) filed a lawsuit against the Rodins in North Dakota state court alleging that he was injured while conducting a maintenance check on a furnace that was not working in the Rodins’ farm shop due to a portable heater emitting dangerous levels of carbon monoxide.

At the time of Alber’s alleged injuries, North Star insured the Rodins under a farmowners policy that provided liability coverage for bodily injuries sustained on their property but excluded bodily injuries resulting from pollutants. The Rodins sought coverage from North Star for Alber’s lawsuit. North Star denied coverage, contending that carbon monoxide was a pollutant under the policy and the pollution exclusion applied.

North Star, thereafter, filed a declaratory judgment action against the Rodins seeking a declaration that it had no duty to defend or indemnify them. The district court granted North Star’s motion for summary judgment and denied the Rodins’ cross-motion, and the Rodins appealed.

On appeal, the Rodins moved to certify to the North Dakota Supreme Court the question of whether the pollution exclusion applies to a claim for bodily injury caused by carbon monoxide from a portable heater. The appellate court declined to certify, finding that the North Dakota Supreme Court provided sufficient guidance on interpretation of insurance policies even though it had not yet interpreted a pollution exclusion. The appellate court also noted that the Rodins did not seek certification until after the adverse district court judgment, a practice the appellate court discourages.

Turning to the merits, the appellate court observed that courts are split between a narrow reading of pollution exclusions — limited to traditional environmental pollution — and an absolute reading that enforces the exclusions as written. The appellate court then predicted that the North Dakota Supreme Court would adopt the absolute approach, which was consistent with prior decisions.

As such, the appellate court turned to the policy language to determine if the alleged emission of carbon monoxide constituted a “discharge, dispersal, seepage, migration, spillage, release, or escape of ‘pollutants.’” Because the policy did not define “discharge” or “contaminant,” the appellate court utilized dictionary definitions and concluded that carbon monoxide was “discharged” from the portable heater and was a “pollutant” because it is a gaseous contaminant that can, at high levels, render air “unfit for use.” Accordingly, the appellate court affirmed summary judgment in favor of North Star.

By: Amy Diviney

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Assignment of Legal Malpractice Claim – Washington

Great American E & S Ins. Co. v. Houston Cas. Co.
No. 87386-5-I, --- P.3d ---, 2026 WL 925412 (Wash. Ct. App. Div. 1, April 6, 2026)

The Washington Court of Appeals held that public policy prohibits an insured from assigning legal malpractice claims against defense counsel to its liability insurer when the insurer defended under a reservation of rights. The appellate court reversed the King County Superior Court’s decision that upheld the assignment and ordered dismissal of the assigned claims.

The case arose from a personal injury lawsuit filed by Michael Vandivere against C3 Manufacturing LLC (C3) after Vandivere fell at an indoor climbing gym. C3 was insured under a $1 million primary liability policy from Great American E & S Insurance Company (Great American) and a $4 million excess umbrella policy from Houston Casualty Company. Great American defended C3 under a full reservation of rights and retained defense counsel on C3’s behalf.

Multiple problems arose during the defense of Vandivere's lawsuit, including conflicts of interest when defense counsel joined a firm representing C3’s excess insurer in a coverage dispute, undisclosed discovery issues, and defense counsel’s failure to disclose dozens of visits to the climbing gym where the injury occurred. These issues forced Great American to retain new counsel shortly before trial and led to monetary sanctions and a negative inference jury instruction against C3.

Great American settled the lawsuit for $5 million — well above its $1 million policy limit —and C3 assigned to Great American its legal malpractice and breach of fiduciary duty claims against defense counsel. Great American then sued the defense counsel. The King County Superior Court dismissed Great American’s direct claims but upheld the assigned claims and certified the assignment question for discretionary review.

The appellate court narrowed the certified question to whether an insured may assign legal malpractice claims against defense counsel to an insurer that defended under a reservation of rights. The appellate court confined its holding to the tripartite relationship involving a reservation-of-rights defense and expressly declined to address assignments where no conflict existed between insurer and insured.

Relying on established Washington precedent, the appellate court emphasized that defense counsel owes an undivided duty of loyalty to the insured client alone. The appellate court reasoned that allowing the assignment would effectively enable the insurer to second-guess defense counsel’s litigation decisions through a malpractice action, undermining the independence that Washington law requires of counsel in the tripartite relationship.

The appellate court further applied the policy rationales, finding that while the risks of collusion and positional shifting were present only to a lesser degree, the concern that allowing assignment would expose defense counsel’s assets as a fund for satisfying insurer obligations — potentially deterring attorneys from accepting defense engagements — was fully present. Rejecting Great American’s argument that barring the assignment would eliminate any deterrent against malpractice, the appellate court noted that the insured remains free to sue. The appellate court reversed the superior court’s decision and remanded with instructions to dismiss the assigned claims.

By: Amy Diviney